ANTHEM FILES LAWSUIT AGAINST CALIFORNIA INSURANCE COMMISSIONER:

Anthem Inc. filed a lawsuit against the California Insurance Commissioner in the Superior Court of the State of California for the County of Los Angeles. The suit seeks to set aside the Commissioner’s decision to disapprove Anthem’s application to acquire control of BC Life & Health Insurance Company in connection with the proposed merger of WellPoint Health Networks Inc. with Anthem. The suit also requests the Court to declare that Anthem’s application to acquire control of BC Life satisfied all the legal standards for approval and enjoin the commissioner from blocking the completion of the merger between Anthem and WellPoint. BC Life, a WellPoint subsidiary, would represent approximately 4 percent of the combined revenues of the merged companies. “The Commissioner is required to follow California law in making his decision and he failed to do that,” said David R. Frick, chief legal officer of Anthem Inc. “That is why we have unfortunately had to file this lawsuit. The Commissioner’s denial of the merger blocks Anthem’s voluntary commitment that will generate as much as $450 million of investments over a 20-year period aimed at enhancing the availability of health care facilities and services in underserved California communities. The Insurance Commissioner has gone beyond the scope of authority granted to him under California law in denying our merger and in doing so he has hurt the very people he states he is trying to help.” The proposed merger of Anthem and WellPoint has already been reviewed and approved by regulators in Texas, Illinois, Delaware, Virginia, Georgia, Missouri, Oklahoma, West Virginia, Wisconsin and Puerto Rico. Each of those regulators applied substantially identical standards contained in laws adopted by virtually all states, including California. The proposed merger has also been reviewed by the California Attorney General, the United States Department of Justice and the Federal Trade Commission. It has been approved by the California Department of Managed Health Care (DMHC), which regulates approximately 90 percent of WellPoint’s California business and is responsible for ensuring that covered Californians have appropriate access to quality health care, and unanimously approved by the directors of the Blue Cross Blue Shield Association. In addition, shareholders of both companies, by a vote of 97 percent, overwhelmingly approved the merger in separate shareholder meetings earlier this year. A copy of Anthem’s complaint is available at www.anthem.com in the section titled Press Room. “I welcome this lawsuit,” Garamendi said in a statement issued in response to the lawsuit. “This action will give me an opportunity to present the full story of how the merger of Anthem and WellPoint would be unfair, unreasonable, and prejudicial to California policyholders. My decision to deny Anthem Inc.’s acquisition of BC Life and Health Insurance Company was made solely in the interest of protecting health care consumers. As I have said repeatedly, nothing in this deal benefits California policyholders. It merely saddles them with the cost of the transaction. The merger, valued at $15.5 billion, will require nearly $4 billion in cash payments, resulting in $3.4 billion in debt. Because dividends paid to the new WellPoint by its health care subsidiaries are the only source of funds to repay that debt, it is clear that businesses and individuals who purchase the new company’s policies will be stuck with the bill. Anthem and WellPoint argue that I have abused my discretion by making a decision to protect Californians. I welcome this suit, and look forward to the opportunity to present in court all of the facts and the reasons why this deal doesn’t work for California policyholders.”

Topics Lawsuits California